WTI futures rise on US inventories data, demand outlook, China trade data

West Texas Intermediate crude rose for a sixth day in seven after a private report showed a fifth consecutive decline in US distillate fuel inventories, drained down by severe cold weather across most of the country. A downward revised domestic output forecast and an upward revised global demand growth projection by the EIA further supported prices. Unexpectedly upbeat Chinese trade data and record high crude imports also gave prices a lift, especially the Brent benchmark.

On the New York Mercantile Exchange, WTI crude for delivery in March rose by 0.61% to $100.55 per barrel by 7:54 GMT. Prices shifted in a daily range between $100.21 and $100.64 a barrel. The US benchmark fell by 0.1% on Tuesday, its first decline in six days, but is up 0.7% on weekly basis so far.

Meanwhile on the ICE, Brent futures for settlement in the same month added 0.07% to trade at $108.76 per barrel, holding in a narrow daily range between $108.68 and $108.87. The European benchmark added less than 0.1% on Tuesday and further trimmed its weekly decline on Wednesday. Brents premium to its US counterpart widened to $8.74 yesterday from 8.57% on Monday, based on closing prices.

The oil market gained support after a private report showed a fifth consecutive weekly decline in US distillate fuel supplies, a close observed category during the winter season. The industry-funded American Petroleum Institute reported that distillate inventories, which include diesel and heating oil, slid by 1.45 million barrels last week, while motor gasoline stockpiles decreased by 479 000 barrels.

US crude inventories rose by 2.13 million barrels, the API said, while supplies at Cushing, Oklahoma, the biggest US storage hub and delivery point for NYMEX-traded contracts, fell by 2.49 million.

API’s statistics however are deemed less popular than EIA’s figures as they are based on voluntary information provided by operators of pipelines, refineries and bulk terminals, while the government requires reports to be filed with the EIA.

According to a weekly Bloomberg survey of ten analysts, US crude inventories probably rose by 2.6 million barrels in the seven days through February 7th, while distillate fuel supplies likely dropped by 2.13 million. Motor gasoline stockpiles are expected to have fallen by 100 000 barrels.

Also offering support to the oil complex, the Energy Information Administration raised its global demand growth forecast, while also trimming its projections for US crude output in the next two years. The government agency cut its domestic crude production forecast for 2014 by 100 000 barrels per day to 8.4 million and by another 100 000 bpd to 9.2 million in 2015.

Meanwhile, the EIA revised up its forecast for world demand growth by 50 000 bpd to 1.26 million bpd in 2014, reflecting the global economys recovery state.

Weather forecasts pointing to extended severe conditions across parts of the US should keep crude supported on the demand side. The National Weather Service reported that a potentially historic winter storm may hit Georgia before bringing heavy snow to the US Northeast. Washington may get 5 inches of snow, while New York may see 8 inches, the agency said.

China imports, trade data

Surprisingly upbeat China trade data and crude imports hitting a record level also offered the oil complex support. Offsetting some previous week data points from the worlds second largest economy and oil consumer, Chinas exports and imports exceeded sharply analysts estimates, confounding projections for a decline in both figures.

The Asian nations exports surged by 10.6% in January, beating expectations for a minor 2.0% increase from Decembers 4.3% growth. Meanwhile, imports soared 10.0% last month, defying expectations for a drop to an expansion of 3% after scoring 8.3% in December. As a result, Chinas trade surplus jumped to $31.86 billion, outperforming forecasts to narrow to $23.65 billion from Decembers $25.60 billion.

Moreover, the Asian countrys crude imports hit a record in January, mainly due to the commissioning of the 300 000-bpd Sichuan refinery and the 280 000-bpd Fujian refinery, and the startup of a new petroleum reserve cite at Huangdao. Chinas inbound shipments of crude jumped by 11.9% in January from a year earlier, reaching a record 6.63 million barrels per day, the nations customs agency reported.

Mark Keenan, head of commodities research in Asia at Societe Generale, commented, cited by CNBC: “The strong data underpins strength in oil markets and across the whole commodity board. The data is so surprising that theres an element of checking whether its in fact correct at the moment.”

Brents gains however are expected to remain limited as market players focus on the upcoming final round of talks between Iran and six world powers, where a permanent accord on curbing the Islamic republics nuclear program in exchange for lifting tough economic sanctions is expected to be reached. Nevertheless, President Barack Obama warned on Tuesday of action against companies attempting to do business with the Persian Gulf nation which violate the international sanctions.